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A taxing delay for GCC firms
The introduction of a value-added tax could be a financial blow to companies that are slow to update their contracts.
May 7, 2010 9:39 by Emily Meredith
Ahmed, who coordinated the IMF’s report on taxation for the GCC when he worked for the organization, said that a consumption tax will most likely affect the top consumers. “For the emirates it would roughly double customs duties if you were to implement the value added tax,” says Ahmed.
While the UAE and Dubai Customs were initially some of the biggest proponents of the taxes, analysts say their calls for the VAT have since quieted and the structural reforms necessary for implementing a consumption tax are not moving as rapidly as they need to be for a 2012 implementation.
Even with the revenue potential, it could take years to set up a tax administration after the governments have signed the necessary treaties. Other governments appear more prepared. Saudi Arabia already has a tax administration in place. Bahrain, Qatar, and Oman – countries which Ahmed says were initially opposed to taxation – are preparing their own administrations.
The director of public revenues and taxation department at Qatar’s Ministry of Economy and Finance, Moftah Jassim Al Moftah, says his government’s preparations are near completion, and only need a final agreement at the GCC level to begin administering. “We are ready,” he says.